Anish Niranjan Nanavaty Vs Reliance Communications Tamil Nadu Ltd. (NCLT Mumbai)
The National Company Law Tribunal (NCLT), Mumbai Bench dismissed an application filed under Sections 66 and 67 of the Insolvency and Bankruptcy Code, 2016 alleging that a ₹260 crore intra-group assignment transaction involving Reliance Communications Infrastructure Limited constituted a fraudulent transaction intended to defraud creditors.
The Resolution Professional challenged an assignment through which receivables of ₹260 crore due from Reliance Communications Tamil Nadu Ltd. (RCTNL) to Reliance Communications Ltd. (RCOM) were assigned to the Corporate Debtor and reflected as receivables from RCTNL in the Corporate Debtor’s books. The RP alleged that the transaction inflated receivables, increased liabilities toward RCOM despite doubtful recoverability from RCTNL, and was undertaken without a formally executed assignment agreement.
The RP relied on transaction audit reports stating that RCTNL had negligible operations and minimal revenue during the relevant years, making recovery highly doubtful. It was argued that the assignment adversely affected bona fide creditors of the Corporate Debtor and amounted to fraudulent trading under Section 66 of the IBC.
The respondents opposed the application contending that the assignment was a legitimate intra-group adjustment among wholly owned subsidiaries operating as a single economic entity under a common financing structure governed by a Master Security Trustee Agreement. They argued that the transaction was reflected in the books of all entities, involved only journal entries without any cash outflow, and caused no loss to creditors.
